Advanced Search
MyIDEAS: Login

Votes or money? Theory and evidence from the US Congress

Contents:

Author Info

  • Bombardini, Matilde
  • Trebbi, Francesco

Abstract

This paper investigates the relationship between the size of interest groups in terms of voter representation and the interest group's campaign contributions to politicians. We uncover a robust hump-shaped relationship between the voting share of an interest group and its contributions to a legislator. This pattern is rationalized in a simultaneous bilateral bargaining model where the larger size of an interest group affects the amount of surplus to be split with the politician (thereby increasing contributions), but is also correlated with the strength of direct voter support the group can offer instead of monetary funds (thereby decreasing contributions). The model yields simple structural equations that we estimate at the district level employing data on individual and PAC donations and local employment by sector. This procedure yields estimates of electoral uncertainty and politicians' effectiveness as perceived by the interest groups. Our approach also implicitly delivers a novel method for estimating the impact of campaign spending on election outcomes: we find that an additional vote costs a politician on average $145.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/pii/S0047272710001787
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 95 (2011)
Issue (Month): 7 ()
Pages: 587-611

as in new window
Handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:587-611

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Lobbying; Special interest politics; Campaign financing;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Dennis Epple & Thomas Romer & Holger Sieg, 2001. "Interjurisdictional Sorting and Majority Rule: An Empirical Analysis," Econometrica, Econometric Society, vol. 69(6), pages 1437-1465, November.
  2. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  3. Atif Mian & Amir Sufi & Francesco Trebbi, 2010. "The Political Economy of the US Mortgage Default Crisis," American Economic Review, American Economic Association, vol. 100(5), pages 1967-98, December.
  4. Palda, Filip & Palda, Kristian, 1998. " The Impact of Campaign Expenditures on Political Competition in the French Legislative Elections of 1993," Public Choice, Springer, vol. 94(1-2), pages 157-74, January.
  5. Arianna Degan & Antonio Merlo, 2007. "A Structural Model of Turnout and Voting in Multiple Elections, Fourth Version," PIER Working Paper Archive 07-025, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Aug 2007.
  6. Tripathi Micky & Ansolabehere Stephen & Jr James M. Snyder, 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, De Gruyter, vol. 4(2), pages 1-26, August.
  7. Arianna Degan & Antonio Merlo, 2006. "A Structural Model of Turnout and Voting in Multiple Elections," PIER Working Paper Archive 07-011, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Feb 2007.
  8. Kevin Milligan & Marie Rekkas, 2008. "Campaign spending limits, incumbent spending, and election outcomes," Canadian Journal of Economics, Canadian Economics Association, vol. 41(4), pages 1351-1374, November.
  9. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
  10. Baldwin, Robert E & Magee, Christopher S, 2000. " Is Trade Policy for Sale? Congressional Voting on Recent Trade Bills," Public Choice, Springer, vol. 105(1-2), pages 79-101, October.
  11. Brian Knight, 2005. "Estimating the Value of Proposal Power," American Economic Review, American Economic Association, vol. 95(5), pages 1639-1652, December.
  12. Allan Drazen & Nuno Lim�o, 2008. "A Bargaining Theory Of Inefficient Redistribution Policies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 621-657, 05.
  13. Grossman, Gene M & Helpman, Elhanan, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 265-86, April.
  14. Milyo Jeffrey & Primo David & Groseclose Timothy, 2000. "Corporate PAC Campaign Contributions in Perspective," Business and Politics, De Gruyter, vol. 2(1), pages 1-15, April.
  15. Tasneem Chipty & Christopher M. Snyder, 1999. "The Role Of Firm Size In Bilateral Bargaining: A Study Of The Cable Television Industry," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 326-340, May.
  16. Schram, Arthur J. H. C., 1990. "A dynamic model of voter behavior and the demand for public goods among social groups in Great Britain," Journal of Public Economics, Elsevier, vol. 41(2), pages 147-182, March.
  17. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
  18. Stratmann, Thomas, 1992. "Are Contributions Rational? Untangling Strategies of Political Action Committees," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 647-64, June.
  19. Thomas Stratmann, 2005. "Some talk: Money in politics. A (partial) review of the literature," Public Choice, Springer, vol. 124(1), pages 135-156, July.
  20. Gautam Gowrisankaran & Matthew F. Mitchell & Andrea Moro, 2008. "Electoral Design and Voter Welfare from the U.S. Senate: Evidence from a Dynamic Selection Model," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 1-17, January.
  21. Yasutora Watanabe & Takanori Adachi, 2004. "Ministerial Weights and Government Formation: Estimation Using a Bargaining Model," Econometric Society 2004 Far Eastern Meetings 742, Econometric Society.
  22. Poole, Keith T & Romer, Thomas & Rosenthal, Howard, 1987. "The Revealed Preferences of Political Action Committees," American Economic Review, American Economic Association, vol. 77(2), pages 298-302, May.
  23. Coate, Stephen & Knight, Brian, 2007. "Socially Optimal Districting: A Theoretical and Empirical Exploration," Working Papers 07-06, Cornell University, Center for Analytic Economics.
  24. Grier, Kevin B & Munger, Michael C, 1991. "Committee Assignments, Constituent Preferences, and Campaign Contributions," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 24-43, January.
  25. Levitt, Steven D, 1994. "Using Repeat Challengers to Estimate the Effect of Campaign Spending on Election Outcomes in the U.S. House," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 777-98, August.
  26. Alexander Raskovich, 2003. "Pivotal Buyers and Bargaining Position," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 405-426, December.
  27. Barry Nalebuff & Roni Shachar, 1997. "Follow The Leader: Theory And Evidence On Political Participation," Yale School of Management Working Papers ysm57, Yale School of Management.
  28. David Austen-Smith, 1987. "Interest groups, campaign contributions, and probabilistic voting," Public Choice, Springer, vol. 54(2), pages 123-139, January.
  29. Thomas Stratmann, 2009. "How prices matter in politics: the returns to campaign advertising," Public Choice, Springer, vol. 140(3), pages 357-377, September.
  30. Stratmann, Thomas, 2002. "Can Special Interests Buy Congressional Votes? Evidence from Financial Services Legislation," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 345-73, October.
  31. Peltzman, Sam, 1984. "Constituent Interest and Congressional Voting," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 181-210, April.
  32. Peltzman, Sam, 1985. "An Economic Interpretation of the History of Congressional Voting in the Twentieth Century," American Economic Review, American Economic Association, vol. 75(4), pages 656-75, September.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. How much does a vote really cost?
    by Ariel Goldring in Free Market Mojo on 2010-12-20 14:00:56
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. John M. de Figueiredo & Brian Kelleher Richter, 2013. "Advancing the Empirical Research on Lobbying," NBER Working Papers 19698, National Bureau of Economic Research, Inc.
  2. Matschke, Xenia & Blanchard, Emily, 2013. "U.S. Multinationals and Preferential Market Access," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79751, Verein für Socialpolitik / German Economic Association.
  3. Atif Mian & Amir Sufi & Francesco Trebbi, 2008. "The Political Economy of the U.S. Mortgage Default Crisis," NBER Working Papers 14468, National Bureau of Economic Research, Inc.
  4. Yan Leung Cheung & P. Raghavendra Rau & Aris Stouraitis, 2012. "How much do firms pay as bribes and what benefits do they get? Evidence from corruption cases worldwide," NBER Working Papers 17981, National Bureau of Economic Research, Inc.
  5. R. W. Major & Madina Rival, 2012. "From informal practices to formal conduct: Which ethical practices and issues for French lobbying consulting?," Working Papers halshs-00709380, HAL.
  6. Hummel, Patrick & Holden, Richard, 2014. "Optimal primaries," Journal of Public Economics, Elsevier, vol. 109(C), pages 64-75.
  7. Mian, Atif & Sufi, Amir & Trebbi, Francesco, 2013. "The Political Economy of the Subprime Mortgage Credit Expansion," International Quarterly Journal of Political Science, now publishers, vol. 8(4), pages 373-408, October.
  8. William Pyle & Laura Solanko, 2013. "The composition and interests of Russia’s business lobbies: testing Olson’s hypothesis of the “encompassing organization”," Public Choice, Springer, vol. 155(1), pages 19-41, April.
  9. Ovtchinnikov, Alexei V. & Pantaleoni, Eva, 2012. "Individual political contributions and firm performance," Journal of Financial Economics, Elsevier, vol. 105(2), pages 367-392.
  10. Thomas Bassetti & Filippo Pavesi, 2012. "Deep Pockets, Extreme Preferences: Interest Groups and Campaign Finance Contributions," Working Papers 222, University of Milano-Bicocca, Department of Economics, revised Apr 2012.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:95:y:2011:i:7:p:587-611. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.